Riyadh at night. The government has already run up almost all of the deficit it expected for 2026.
Saudi Arabia is on course to miss its deficit forecast for the second time this year, after war costs used up almost all of the wider gap the government set only last month.
The deficit reached 244 billion Riyal ($65 billion) in the first nine months, the finance ministry said in its quarterly budget report on Tuesday. Its forecast for the whole of 2026 is 245 billion Riyal, with three months still to go.
Spending runs ahead: the government spent about 1.1 trillion Riyal in nine months, against revenue of 859 billion Riyal.
Moving the goalposts: the budget approved last December planned for a deficit of 165 billion Riyal. Last month, the ministry raised its spending forecast to a record, mainly for repairs and supply disruptions, and the deficit forecast rose to 245 billion.
Revenue was actually expected to come in slightly higher, according to MEES.
A softer quarter: the third-quarter gap was 84 billion Riyal. Spending eased 8% from the second quarter, but revenue fell 23% as oil income dropped 37% from its spring peak.
The bill comes home: electricity and water prices rise from Jan. 1, the government said last month.
Power: power costs about 17% more per unit, the biggest rise since 2018. A home using 2,000 kilowatt-hours a month will pay 420 Riyal for its power instead of 360, plus a new fixed charge of 70 to 100 Riyal a month.
Water: the water bill nearly triples. A home using 30 cubic meters a month will pay close to 70 Riyal for water and sewage instead of about 25, before new fixed fees.
Why it helps the budget: the state compensates Saudi Energy, the national power company, for selling below cost. Higher tariffs shrink that bill.
Cushioning the blow: government employees, retirees and families on social security will get 500 Riyal a month to soften the hit. So part of the savings goes straight back to households.
How the rest gets paid for: borrowing. The National Debt Management Center had secured about 90% of this year's roughly 217 billion Riyal funding needs by May, and it keeps issuing local sukuk every month.
Separately, the state's wealth fund raised $3 billion on Tuesday in loans backed by Italy.
What may come next: the 2027 budget is due in December, and the ministry has already pencilled in another deficit, of about 3.6% of GDP. Expect more borrowing. The utility move also shows that cutting subsidies, a long-standing IMF recommendation, is back on the table.
Help on the way: Aramco pays its 82.1 billion Riyal base dividend on Nov. 25, most of it to the government and PIF.
For more on how PIF is funding itself, read PIF Taps Italy for $3 Billion as It Leans More on Borrowed Money.
